May 18, 2008

On A Carbon Tax

I have always supported a carbon tax, because if we truly believe that carbon based emissions are causing permanent environmental damage, and personal health damage, the government is in its right to tax it, the same way it taxes cigarettes and alcohol.

This is why I supported the idea 2 years ago when someone explained to me why this would not be a simple tax grab, but just punishing those who pollute, and rewarding those who save. Since then, the youth wing in Quebec always advocated the implementation of a carbon tax.

Here is David Suzuki today on Question Period.

Poor Jack!, I think the Liberals may have their election ad…

"I'm really shocked at the NDP on this, because I had thought the NDP had a very progressive outlook on this, and that astounds me. We have the same thing in British Columbia, a government that has proposed a carbon tax, and I take my hat off to them. Economists have been telling us that this is the most effective way to get people to change their behavior, and to have the NDP in British Columbia attacking this just astounds me, because there is just no question, this is the way to go. It's revenue neutral, it's not a tax grab, governments can use the revenue to help people, tax rebates for lower income. To oppose, this because of ideology or something is just nonsense. This is something that has got to come."

Instead of gouging the average-joe consumer (as Dion's plan would do) .. the NDP would take a chunk out of those ongoing record windfall profits that the big producers are generating. When Shell, ESSO and the rest of the multinationals skim billions of new profits from Canadians each quarter, there is room for the government to come in and 'tax' the appropriate part of the oil cycle.

Once again, Fuddle Duddle does an unprovoked attack on New Democrats for no particular reason, other than the fact that the owner of this site should be a bloody Conservative ideologically.

leftdog, can you tell me the other reasons I should be a Conservative?

I really am curious...

Is it because I believe in the right to tax polluters in order to invest in green technologies? Is it because I believe the government has a role to play in helping Canadians reduce their consumption? I know I sound just like John Baird...right?

cicely, my point on the gas tax was that taxing the oil companies as Clinton wanted to do, to pay for a holiday, would cause a spike in gas prices, a very marginal increase in US demand does not increase global oil prices when the US is only a player (albeit an important one) in the larger global economy.

So Clintons plan was a savings of about 30 dollars or more, which amounts to a decent amount of change for some families.

The people saying the oil companies would just raise the cost of gas were assuming the oil companies were going to creaet a shortage, which as we found out with Enron, is very very illegal.

Same deal in Canada. A carbon tax, which for all we know, can replace an excise tax on gas, is a pretty good idea. The oil companies will have to go back to making 1 billion at a time instead of 10, but I think the consumer has suffered long enough.

As for cutting income taxes with the proceeds of the carbon tax, for the families who drive 5 cars, it may not make a huge difference. but that is why government has a role to play in curbing high energy consumption.

Antonio: Let's be very clear the NDP has a long history of supporting policies that reduce GHG. They have also long supported cap and trade over carbon tax. It has nothing to do with opposing Liberals for the sake of opposing Liberals.

We both agree that reduction of GHG emissions are a priority the NDP just believes that oil companies and big corporate polluters need to step up first and foremost. Also, in order for Canada to move quickly and decisively toward a carbon-neutral country the federal government will have to have the revenue to offset the transition for both corporations and consumers (r&d for alternative energy, infrastructure for rail and public transit, incentives for consumers to reduce their personal carbon footprint).

The Liberal revenue neutral plan would mean that the federal govt would have no new revenue and the choice would be either not do these things or run a deficit. Deficit is already looming given that the LPC has allowed the Cons to limit the federal fiscal capacity (read Paul Wells).

I am among the very small group of people that believes big projects can be financed with a deficit if they can be shown to provide a larger benefit down the road.

Where art thou Keynesians?

I know according to leftdog, this makes me an evil conservative, because anyone who disagrees with the NDP is an evil right whinger right?

The carbon tax is a proposal which begins to help curb citizen's consumption. I think the oil companies will be very hard hit by a carbon tax as it is, especially if the carbon tax on gas replaces the current excise tax we pay on it.

Antonio: Fine that you support a running a deficit in order to accomplish a national good but I doubt that the LPC would be willing to.

BTW - I personally am not a deficit-hawk.

I would also argue that it is the LPC that effectively made deficit financing by any government anathema to Canadians. Don't forget it was Paul Martin and the LPC that argued that cutting and downloading were absolutely essential to slay the deficit dragon. And they did it by downloading to provinces that (at least in the case of ON) than downloaded to the cities, crippling many municipalities ensuring that poor Canadians are worse off today than they were 25 years ago.

This means that there is no way the LPC will consider running a deficit. Which brings us back to the revenue neutral carbon tax. If the $17 billion comes in through carbon tax and than $17 billion goes out through either income tax reduction or some kind of carbon tax rebate, where will the government money come from for:

1. massive ramp up of public transit to reduce GHG2. more funds to help Cdns retrofit there homes to reduce GHG3. real cash for infrastructure so that we can improve and extend rail capacity to reduce GHG4. provide incentives to industry to develop new alternative energy to reduce GHG5. provide incentives to help develop new green collar jobs to reduce GHG and create 21century economy

The simple truth is that the market alone will not be willing and indeed able to make the necessary changes to shift away from what is a very destructive path.

Most consumers will not be able to shoulder the burden of the higher costs across the board.Particularly if the LPC is also saying that they will have to come up with the cash to buy the hybrid, green their homes (better windows, better insulation, upgrade the furnace and the water heater, switch to solar/wind) on top of paying the day to day cost increases for gas, food and heating.

The NDP has a strong environmental policy history, it also has a strong history fight for social and economic justice. The Cap and Trade policy marries these values.

Antonio: another quick question. I get that Dr. Suzuki in part wants the carbon tax to try and discourage people from wasteful use of gas. Some liberals are speculating that the carbon tax would not increase gas prices (although I don't pay that) because it would just replace the excise tax. So if the Liberal plan doesn't increase gas prices what would the point of this be exactly? It wouldn't actually work to pressure consumers to change driving habits.

I would imagine that you would argue that a gas tax (wether excise or carbon) should be used to help reduce GHG emissions. Part of the excise tax, I believe was being used to rebate consumers for buying more fuel efficient cars.

If the LPC plan goes forward and you replace the excise tax with a revenue neutral carbon tax that actually hurts the government's ability to assist consumers in reducing their GHG emissions. While at the same time NOT actually doing the thing which Dr. Suzuki wants which is to force consumers to reduce their consumption rate since, once again, according to the LPC plan, gas prices would not go up.

BTW - Suzuki has in the past supported a cap and trade system. I belief that he would like both in place and perhaps if the LPC has spent some of those 1995-2006 surpluses on helping with more transit or increase our rail capacity, or have a more aggressive program for home retrofitting, we could do both but I just don't think it is feasible given where the LPC and Cons have left us that we can go from an almost dead stop (standing in the dressing room no less) to a world record sprint across the carbon-neutral finish line.

The rapidly rising price of gas currently being experienced here in Canada is already forcing Canadians to limit their use of it. With such high prices at the pumps, consumption is very likely down here. High prices achieve the same result that rationing does ... except that with high prices, the rich can afford to use more ... the poor and working families have to use less.

At the same time, the major oil companies are raking in RECORD profits because while the price of their finished product is increasing, their cost of production remains fairly constant.

So ... what do so called 'progressive Liberals' prescribe as a solution (?) a new tax that will raise the price of gas even more and restrict the ability for working people and the poor to afford it. Typical right wing Liberal logic.

Not a word is said about the truck loads of money that is going to the oil companies! Protected by Liberal thinking once again!

The Liberals are showing no creativity on this topic at all. I find the Liberal plan to 'tax polluters' is just a code phrase to tax Joe & Mary Average as they try to get to work each day, and do the normal day to day transportation that they need to conduct family life. You are advocating hitting them even harder with higher gas prices ... and somehow giving them some 'other' type of 'tax break' to compensate. This is called political alchemy. It is without any kind of economic analysis or proof of viability.

In the meanwhile, Shell, Esso and all the rest, continue to profiteer on the backs of the same citizens that Liberals are abandoning with their plan.

Tax the oil companies until they scream, take that money and infuse that back in to Joe & Mary's monthly budget.

Stop protecting the big multinationals ... that is Tory thinking ... it should NOT be Liberal thinking!

P.S.By the way ... only an arrogant Tory would still continue to state that out of the ENTIRE Canadian political blogosphere that there are NO RELEVANT DIPPERS. We go to work, we pay our taxes, we do the things that good citizens are expected to do. Your little jab at New Democrats is proof indeed that you are so far right on the Canadian political spectrum, you might as well be a bloody Conservative!

seriously leftdog, the NDP has done far more than me to get stephen harper elected to 24 sussex

Look, I don't think anyone who reads your blog thinks you have been much of a boon to the Liberals but the tired old canard that NDP votes belong with the Liberals is so stale it doesn't need refuting.

I'm a dipper who would love to see a Liberal minority government with the NDP holding the balance of power but I know its far more likely that the Liberal-Tory coalition government we've all grown so familiar with would just swap seats.

Anyways, surely the NDP is helping out the Liberals here by not competing with them for the bountiful voting pool that wants to see higher taxes on fuel. We'll fight the Cons for the populist vote and you can have Suzuki. As Jack likes to say "Thats Win Win Win Win Win!"

Antonio: Are you complaining that the NDP is commenting on an LPC policy that is not yet released? Shouldn't you focus that criticism on Dion for sending up a trial balloon on what would seem to be a major policy plank (not to mention his own personal flip-flop on this issue) without having the goods on the policy in the top drawer in case he runs into push-back?